Alberta's coat of arms: Thanks to oil revenues, the Wild Rose province spends more per capita than B.C., without sales or health taxes.

As a province that floats a free-spending government on oil and gas revenues, Alberta is facing some choices as the tide goes out.

I’d say tough choices, but that’s a relative term for a government that spends just about as much as the B.C. government does on three quarters of a million fewer people.

Alberta budgeted just over $41.1 billion for the current year while the B.C. government planned spending about $43.9 billion. So the so-called conservative government of Alberta spends about $1,100 more per person than does the government of British Columbia. It’s a province with a lot more fat to cut relative to the rest of the country.

They’ve been able to afford to be so generous while maintaining the so-called Alberta advantage of no provincial sales tax or health care premiums because of the resource revenues, primarily from oil and gas. About 28 per cent of the budget for the current year was to come from non-renewable resources. That compares to less than 6 per cent in B.C. for all natural resources.

Alberta Premier Alison Redford says that resource revenues are coming up about $6 billion short this year but she has ruled out raising other taxes, at least for now. But what got people talking was that in a telephone town hall meeting with Conservative party members, she refused to rule out a provincial sales tax or health care premiums as part of the conversation sometime in the future.

While that doesn’t sound very scary from here, in Alberta, any mention of the possibility of bringing in a sales tax has been long considered politically toxic.

In B.C. this week, the Canadian Centre for Policy Alternatives issued a report that detailed how increasing dependence on sales tax and Medical Service Plan premiums has made the tax system in this province less progressive because lower income earners now pay an effective tax rate than is higher than those who earn more.

Nothing illustrates that better than MSP premiums, which have gone up by 85 per cent since 2000. At the same time, personal income tax rates have been dramatically reduced. The net effect is that a family of four with two income earners making a total of $60,000 pays more in MSP premiums than it does in income tax.

While low income earners pay nothing or a reduced health care premium, everyone who earns $30,000 or more pays the same amount — $133 a month for a family of three or more. Those fixed premiums represent a greater percentage tax for low income earners than they do for people with higher household incomes.

B.C. collects about $2 billion a year from MSP premiums, or just under 5 per cent of the provincial budget. It collects $6 billion from the provincial share of the Harmonized Sales Tax. Together the two taxes that Alberta doesn’t have contribute just under a fifth of all revenues in B.C.

Alberta has a flat-rate income tax, which is considered to be more regressive than the variable rate we have, which increases for higher income earners.

But they also pay more income tax than British Columbians do for the same amount of income, at least up to a family income of $90,000. Very high income earners will pay less under the flat tax.

Combined with the other flat rate taxes — provincial sales tax and health care premiums — that Albertans don’t pay, the Alberta system is for most people more progressive than ours despite the flat income tax rate.

What strikes me as ironic is that the industry that allows Alberta to have a more progressive tax regime is largely opposed in B.C. by many of the same people who are calling for tax reform here.

The wealth from oil and gas production takes the pressure off individuals and other businesses to pay for government services in Alberta. In good years it has allowed the provincial government to be a big spender and still put billions away in rainy day funds.

If Alberta’s finance minister was crafting a budget for next year with the same level of natural resource revenues that we have in British Columbia, it would be a vastly different document.

The choices would be a lot harder and the regressive taxes that they have had the luxury of being able to do without would be solidly back in the mix.

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